Supreme Court Denies Class Action Status in Case Involving Medical Treatment for Out of State Workers

Over the years, a number of trucking companies have required, as a condition of employment, that drivers' agree that when they are released to light duty work, they will accept treatment in Iowa.  In Roland v Annett Holdings, Inc., No. 18-1092 (Iowa March 20, 2020), the Supreme Court addressed such a memorandum of understanding in the context of a class action challenge to such proceedings.

Claimant was a driver for Annett, where he was injured.  He had signed a memorandum of understanding (MOU) agreeing to short-term light duty and treatment in Iowa.  His initial treatment was in Alabama, where he lived.  His doctor prescribed a certain type of therapy with a cooling machine.  The employer sought to have claimant return to Iowa for treatment, but he could not travel by air with the machine and could not keep the electricity on for the machine while driving.  The employer required claimant to return to Iowa.  Claimant filed an alternate medical care application, which was granted by the agency.  The deputy found the MOU violated Iowa Code 85.18 by attempting to avoid the reasonable and not unduly inconvenient requirements from 85.27.  Both the district court and Court of Appeals affirmed this finding.

After the decision of the Court of Appeals, the claimant filed a civil action alleging deprivation of statutory rights, bad faith and other losses, as well as mental distress as a result of the MOU.  Plaintiff sought to have this action certified as a class on his behalf and on behalf of all other Annett drivers who had signed the MOU.  Annett argued that the Court of Appeals had not found that the MOU was illegal, but only found that it was illegal as applied  Accordingly, there were too many individualized issues for class certification.  Despite this argument the district court and Court of Appeals granted class action status.

The Supreme Court reversed the decision of the Court of Appeals and concluded that class action status was inappropriate.  The court found that there was insufficient commonality of issues for a class to be certified.  For class-action purposes, according to the court, the validity of the MOU "must be determined driver by driver based on their individual factual circumstances." The Supreme Court concludes that the district court erred in finding that plaintiff had met the commonality requirements.  In addition, the Court found that under Rule 1,263 there are 13 factors that must be considered in determining whether class action status is appropriate.  The Court concluded that common factors did not predominate over individual questions in this action.  The focus on each action would be on the specific circumstances of each class member and therefore class action status was inappropriate.  An independent reason for denying class status was that there was no evidence that the putative members of the class had exhausted administrative remedies.  Allowing group adjudication, according to the court, "flouts the Iowa legislature's 'grand bargain' creating the workers' compensation system." 

Justice Appel dissented, noting the broad discretionary authority granted the district court and the availability of other safety net processes as the litigation progresses.  Justice Appel noted that Iowa class action standards were broader than those at the federal level.  Justice Appel noted that the plaintiff sought a determination that the MOU was unlawful in any setting, not just as applied, and that this common factor predominated over all factors.  Claimant's bad faith theory was that the MOU was illegal as a term and condition of employment in the workers' compensation context.  On the exhaustion question, Justice Appel noted that this issue had been raised sua sponte by the court. Because this was not a jurisdictional issue, it was not properly before the court.  Justice Appel would have affirmed the decision of district court.